Council proposes 7.5 per cent rate rise

SOUTH Gippsland Shire Council has released its draft 2013-14 annual budget and is inviting public comment.

Well aware how unpalatable many ratepayers will find the budget’s proposed general rate increase of 7.5 per cent, councillors were at pains in their discussions at last Wednesday’s council meeting to stress that the document is in draft form only.

“We encourage comments from the community,” said the mayor, Cr Kieran Kennedy.

“Please give us the feedback. Tell us where we can make cuts if you don’t want rate rises,” said Cr Nigel Hutchinson-Brooks. Describing this, the tenth council budget process in which he has been involved as “by far the hardest,” he said that it was a question of balancing “what you want, what you need and what you can afford”.

Cr Jeanette Harding said that she was confident that ratepayers realised that “we are not spending money willy-nilly, we are spending money for them”.

The general rates and charges increase of 7.18 per cent (including an increase of 2.5 per cent in waste services charges) is greater than what was in last year’s Long Term Financial Plan. This is largely because of the much higher than anticipated $4.61million unfunded superannuation call sprung on Council last year. The Victoria Grants Commission allocation is also reduced and there are other cost pressures, such as having to collect the newly introduced Fire Services Levy on behalf of the State Government.

As a result, after several years in which the objective was to reduce long term debt, Council will borrow $4 million in 2013/14. The focus is shifting to provide additional funding for capital works renewal programs over the coming years.

Proposed for the 2013/14 financial year is: operating expenditure (including depreciation) of $50.98 million; capital expenditure of $13.1 million; total debt redemption of $0.62 million; total cash outflows of $55.24 million; total cash inflows of $60.43 million; and cash at end of financial year of $5.68 million.

The rates and charges increase is targeted at strengthening Council’s overall financial position and should bring in $34.15 million. The 2013/14 rise is expected to be the highest. The following years’ rises are projected to be 6.25 per cent in 2014/15, 5.32 per cent in 2015/16 and 2016/17 and 5.09 per cent in 2017/18. From 2018/19 onwards, rate rises are projected to reduce to 4.87 per cent. The rates and charges increase for the 2012/13 year was 4.85 per cent.

“Nobody wants to put the rates up 7.5 per cent,” said Cr Mohya Davies. “However, you have to understand that if we didn’t strike this rate we’d have to significantly reduce services.”

There was widespread agreement that the budget development process had been “challenging,” to say the least. Councillors stressed how much time they have spent agonising over the figures. Experienced councillor Jim Fawcett, who has been through it all before and is an accountant by profession, reprimanded newbie Cr Don Hill for asserting that too little time had been spent on the budget and that “we need to rein in a budget out of control”. Cr Hill said that he would be voting against the budget. (He was unfortunately called away from the meeting before the debate was over and before he had a chance to cast his vote.)

“We have spent lots of time on the budget,” insisted Cr Fawcett. He also took exception to Cr Andrew McEwen’s suggestion that Council was not financially sustainable and that the answer lay in pursuing “business effectiveness rather than administrative efficiency”. Cr McEwen recommended a leaner management structure and looking at shared services to reduce costs. “The onus is on the community to speak up and say where they would make cuts,” he concluded.

Cr Fawcett hypothesised about “a tale of two budgets” – one in which Coal Creek was closed, the Meals on Wheels service was curtailed, Parks and Gardens services were reduced, and so on. That was not what Council was opting for this time, but “next year that could happen, but we will talk about the budget with the community first”. Cr Fawcett concluded by warning that Council was generally not very good at making money, but times are tough, so it is becoming imperative for Council to look at commercial ventures.

Cr Lorraine Brunt expressed similar views, saying: “We’re trying to cut to the bone. We need to be focussed on some productivity in this shire.”

Cr Hutchinson-Brooks said he has already put the question to various community groups and individuals and he will continue to do so: ‘If you want rate rises kept around CPI, what services would you like to do without?’

“I feel we’ll have to make cuts to services over the next few years, and so it is very important that community feedback is sought.”

He said it was not good enough to suggest cutting staff, “because if you cut staff you cut services”. He added that he was confident the 7.5 per cent rate rise would be a one-off, largely introduced to deal with the unfunded super liability of $4.6 million payable by July 1.

Cr Bob Newton, who was discussing his 20th shire budget as a local councillor, praised the shire officers, led by finance manager Tom Lovass, who put together the budget, but said that he was against a rate rise of 7.5 per cent. “There are a lot of people out there hurting,” he argued, insisting that the rates would be too costly for too many. With Cr Hill absent by this time, Cr Newton’s was the lone vote against the draft budget. Even those councillors who had reservations about the hefty rate rise decided that they would gauge public reaction before dismissing what is, after all, only a draft document.

The draft 2013-2014 Annual Budget is now on public exhibition (see it on the shire council website or at council offices) along with the draft 2013-2017 Council Plan, 2013-2014 Annual Plan and the Mayoral and Councillors Allowances. Written submissions are sought from the community until May 29. Public submissions will be heard at a Special Meeting of Council on Wednesday 19 June commencing at 12 noon at Council Chambers, Leongatha.

The Conversation
The Conversation is a not-for-profit educational website, whose editors work with academics and researchers to publish evidence-based articles that are free to read and republish. Each month, The Conversation reaches a global audience of 5.2 million users